Tesla May Be More Valuable Than Ever Imagined

Written by: Chris Ciaccia08/11/14 - 9:01 AM EDT

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NEW YORK ( TheStreet) –– Tesla Motors has been impressive since coming to the forefront of investors' minds in late 2012, but the opportunity ahead may be more impressive than almost anyone has imagined, so far.

Deutsche Bank analyst Rod Lache upgraded Tesla to "buy" with a $310 price target, noting that the company's growth trajectory "will be much steeper, their mix will be much richer, and their costs will ultimately be much lower than we previously assumed." He's now expecting Tesla to have volumes of 129,000 units in 2017, up from a previous estimate of 83,000. He also expects volumes of 60,000 and 100,000 in 2015 and 2016, up from 51,000 and 60,000, respectively.

Shares of Tesla were rising in early Monday trading, gaining 2.7% to $254.80.

With the help of the Gigafactory, Lache believes it's "increasingly clear" that Tesla can get to 500,000 annual run rate by late this decade, with opportunities beyond that figure.

CEO Elon Musk made comments on the earnings call that not only helped propel the Model X into the forefront of investors' and driving enthusiasts minds, but could highlight the earnings power of the company. As the Model X goes into production in the Spring of 2015, Musk said he expects the split between the Model X and the Model S to be around 1,000 units a week and, given the strength of the market for SUVs, it could be slightly skewed toward the Model X.

"So if we -- so it's sort of reasonable to expect that if one has -- just address the demand and then the servicing side of things -- it's reasonable to expect that if we see sort of a comfortable 1,000 unit demand on the sedan side, well, probably we should expect that similar number on the SUV side," Musk said on the call. "My guess is we'll actually see slightly higher on the SUV side. I think the Model X is going to a phenomenal car."

Pricing for the Model X has not been announced, according to an emailed statement from Tesla spokesman Liz Jarvis-Shean.

Lache now expects the company to earn 75 cents, $3.37, and $9.33 a share in 2014, 2015, and 2016, up from 91 cents, $3.65, and $3.86, respectively. By 2020, the company should be able to earn $27 a share, up from a prior outlook of $20 a share, given the company's plans for improved cost structure as well as a higher-than-estimate skew toward the Model X.